If lawmakers fail to act by the end of the year, breweries, distilleries, and wineries across America will face a tax increase.
The Craft Beverage Modernization and Tax Reform Act (CBMTRA) was first enacted through the Tax Cuts and Jobs Act of 2017. This bill provided federal excise tax relief for breweries, wineries, and distilleries, allowing these businesses to hire more employees, purchase new equipment, and expand production.
Unfortunately, this tax relief was temporary and is set to expire at the end of the year. Congress can make these tax cuts permanent by passing S. 362/H.R. 1175, legislation introduced by Reps. Ron Kind (D-Wis.) and Mike Kelly (R-Pa.) and Senators Ron Wyden (D-Ore.) and Roy Blunt (R-Mo).
This legislation is overwhelmingly bipartisan and has been co-sponsored by 350 members of the House of Representatives and 76 Senators. Congress should pass this legislation, either as a stand-alone proposal or as part of a broader legislative package.
ATR has kept a running list of dozens of distilleries, breweries, and wineries that have been able to expand production, hire new workers, and invest in the economy thanks to the CBMTRA. Making these tax cuts permanent will help businesses continue supporting the economy and workers.
Examples of businesses that have already seen benefits from the CBMTRA include:
(Healdsburg, California) – The vineyard was able to create new jobs, buy new equipment, and remodel their tasting rooms because of the Tax Cuts and Jobs Act:
“The craft beverage bill has been an incredible boost for our industry and this extension allows us to continue investing in our wineries by buying new equipment, remodeling tasting rooms, hiring new employees and more,” said Hank Wetzel, founder and family partner of Alexander Valley Vineyards and Chairman of Wine Institute. “All of this benefits local communities in the form of jobs, tax revenue and support for the hospitality industry.” – Dec. 20, 2019, Southeast Farm Press article.
(Clackamas, Oregon) – Because of the Tax Cuts and Jobs Act, the owner was able to create new jobs and invest in new equipment:
Jeff Parish, Co-Founder of Portland Cider Company and Committee Member of the United States Association of Cider Makers: “As a cider maker, the temporary CBMTRA allowed me to purchase new equipment, hire new staff and grow my business. If the excise tax credits go away, I have to reverse those choices. We’re hopeful the permanent version of the bill passes, so we can plan with certainty for a growth-future.” – Feb. 6, 2019, U.S. Senate Finance Committee press release.
(Milwaukee, Wisconsin) – The Tax Cuts and Jobs Act allowed the distillery to hire four new employees, invest in a new facility, and ordered a new bottling line:
“Central Standard Distillery co-owner Evan Hughes said his business was able to grow faster than it normally would because of the act. He attributes four key growth areas to the success of the act, including: Central Standard hired four new employees, bringing staff totals to 22 people. The company invested in a 15,000-square-foot facility on Clybourn Street. In addition, Central Standard ordered a new bottling line for improved efficiency and offered health care to all of its employees.
“It gave us the courage to expand our business quicker than we normally would,” Hughes said. – Dec. 10, 2019, Milwaukee Business Journal.
(Cleveland, Ohio) – The tax cuts allowed the bar to add new jobs and invest more in their facility:
Sam McNulty, co-founder of multiple Cleveland brewery/restaurants including Market Garden Brewery and Bar Cento, credited the tax break with helping his operations expand at an accelerated rate, “which in our case meant several million dollars of investment in our facility as well as the creation of a large number of full-time positions.”
Not having certainty for the tax cut beyond next year could stymie other, more long-term investments.
“As in life, so it goes in business, where if the future is uncertain, you are more likely to be less secure and optimistic and thus more conservative and frugal,” McNulty said. “There’s not a bank on the planet that will finance a business that has only a one-year lease. And so a one-year extension is appreciated, but it is not enough to really fuel this growing industry and reach the full promise of the economic benefits of local craft beer.” – Dec. 17, 2018, Crains Cleveland article.